If you think you’d like 2012 to be the year you take charge of your financial life, the very first thing you should consider is to set a goal in the New Year to get out of debt for good, and stay out. Perhaps that suggests consolidating credit card debt into one payment, paying off the arrears one at a time, or selling things you are sure you do not need. In any case, below are a couple of tips to help you you get started:
1.) Power Starts With Data. First, understand exactly how much you owe on your current debts. Write them down in order of balance owed. This does not need to be anything fancy, you can simply create a spreadsheet with columns of the debt name, amount owed, interest rate that you are paying, and minimum amount due each month to keep it current.
2.) Write Down Time To Payoff. It you continue paying off your loans at the rate you are now, how long will it be until they're paid off? It can serve as inducement to be clear about how long this will take, and it’s usually surprising to many folks how quick the debt can pile up, and how long that it requires to pay back.
3.) Start Paying It Down . Pick one debt and begin paying as much additional on the minimum as you can afford each month. Some people will start by paying off the credit card or debt with the highest rate of interest, but some financial advisors advise that we start by paying down the debt with the littlest balance, then rolling that payment into the following balance once it’s paid off. Decide what’s best for you.
4.) Think about whether you can actually afford your mortgage?” If you've had a change in your situation, such as a decrease in income or a sickness that is making it tough to keep abreast of your mortgage payments, call your mortgage company.
Some mortgage companies offer what’s called a mortgage modification plan. This modification essentially means you'll qualify to have the particulars of your original loan reworked – leading to a decreased rate of interest and decreased monthly payments.
You may also choose to change your housing arrangement by downsizing into something more within your means. It doesn’t have to last forever, just until you can get back to a good financial position.
5.) Focus on your bills. Do you pay your mobile phone bill without taking a look at it? Sounds simple enough, but a few people stack bills unopened and just pay the bill without ever examining the bill itself.
It isn’t uncommon to find that you have been overcharged, in a few cases continually. Would you not like to keep your cash in your account rather than send it to your mobile phone company (sure you would).
6.) Put something in savings each payday. Even though it’s only $20.
It is essential to pay yourself first, in whatever amount you can afford. Making saving a habit is critical, and you'll be surprised by how the account will build over a period of time.
Outline
You can get your debt in order by staying alert to what is going on and working toward paying it off a little at a time. Don’t let yourself see the dilema as hopeless. There’s help available if you should happen to feel lost, confused or frustrated.
Mike Warren writes about subjects related to goal setting and personal development, and maintains a website dedicated to the topic at Achieving Personal Goals. When not writing about personal development, he enjoys his own fitness pursuits, aviation and playing golf.